Posted on September 10, 2014 by Giordano Lombardo
Attended by the world’s top central bankers, the European Central Bank (ECB) met in August for its regular monthly meeting in Jackson Hole, Wyoming. I thought I would share some insights from Tanguy Le Saout, Pioneer’s Head of European Fixed Income.
Anticipation was running high that the ECB would announce further measures to help tackle Europe’s twin problems of low growth and falling inflation. In a surprising move, ECB President Mario Draghi, deviated from his prepared speech. These and other unscripted remarks appeared to signal a significant shift in ECB policy. It raised hopes for the imminent announcement of a Quantitative Easing (QE) program and caused a substantial fall in European bond yields and the euro currency. With expectations high, did the ECB deliver? Continue reading
Filed under: ECB, Europe, Fixed Income Market Insights, Giordano Lombardo, Inflation, Macroeconomics | Tagged: Central Banks, deposit rates, ECB, economy, Euro, Euro economy, Europe, Fixed Income, GDP, global growth, inflation, Mario Draghi, monetary policy, QE, sovereign QE | Comments Off
Posted on September 2, 2014 by Sam Wardwell
Last week in the capital markets: A Quiet Last Week of August. Economic news again suggested the U.S. economy is fine, while Asia and Europe are facing headwinds. Mario Draghi’s dovish-sounding speech at Jackson Hole a week ago was probably more market-moving than anything that happened last week. Continue reading
Filed under: ECB, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Inflation, Macroeconomics, Political, Sam Wardwell, United States | Tagged: Bonds, Capital Markets, Central Banks, European markets, Eurozone, GDP, inflation, Japan | Leave a comment »
Posted on August 28, 2014 by Giordano Lombardo
Pioneer’s Head of Global Asset Allocation Research, Monica Defend, along with U.S. and Latin America Global Asset Allocation Research Economist, Annalisa Usardi, recently released an economic update on the Emerging Markets. Highlights from their report surrounding Latin America, specifically Brazil and Mexico, are below. To read the full report, click here. Continue reading
Filed under: Giordano Lombardo, Macroeconomics | Tagged: emerging markets, GDP, inflation, monetary policy | Leave a comment »
Posted on August 14, 2014 by Giordano Lombardo
Pioneer’s Head of Global Asset Allocation Research, Monica Defend, along with Europe and EMEA Global Asset Allocation Research Senior Economist, Andrea Brasili, recently released an update on the UK economy. The update was based on the 2Q14 preliminary results for gross domestic product (GDP), which came in higher than expected. They expect growth above 3%, higher inflation in 2015, and a gradual shift in monetary policy towards higher rates. Highlights from their report are below. To read the full report, click here. Continue reading
Filed under: Europe, GDP, Giordano Lombardo, Inflation, Macroeconomics | Tagged: Europe, GDP, inflation, monetary policy, Unemployment | Leave a comment »
Posted on June 30, 2014 by Sam Wardwell
Observations on the Capital Markets – Week Ended June 27, 2014
Summer, summer, summertime – time to sit back and unwind. The Fresh Prince and DJ Jazzy Jeff might have been talking about the quiet tone last week in the capital markets.
- Can you spell Goldilocks? Stocks, bonds, and commodities all rallied in the first half of 2014…for the first time since 1993.
- Currencies: The Euro and Yen each rose 0.5%-1% against the dollar, extending their gains for the month.
- Bonds: The 10-year Treasury yield fell 9 basis points (bps) to 2.54%; the 10-year TIP yield fell 8 bps to 0.27%.The Bank of America Merrill Lynch High Yield Index (BoAML HY) widened 1 bp to 3.48%. The Japanese 10-year bond fell to 0.55%, a 2014 low. Eurozone bond markets were generally quiet.
- Equities: The S&P 500 Index declined almost imperceptibly last week. Within the index, Utilities and Consumer Discretionary (each up 1.0%) led; media companies rallied when the Supreme Court effectively shut down Aereo. Industrials (-1.7%) lagged; Consumer Staples (-1.3%) and Energy (-0.9%) were also weak. MSCI Europe and Japan were each down 1.5-2%. The MSCI Emerging Markets Index was down a bit.
- Commodities: WTI Oil was down about $1 (1%)…still not really reacting to Iraq. Gold, up 3% last week, gained another $5 (0.5%).
Filed under: Equity Market Insights, Europe, GDP, Inflation, Macroeconomics, Political, U.S. Dollar, United States | Tagged: Capital Markets, currencies, ECB, economy, emerging markets, employment, equity markets, Europe, European markets, Fed Action, GDP, housing, inflation, Japan, Sam Wardwell, Ukraine, US GDP | Leave a comment »
Posted on May 5, 2014 by Sam Wardwell
First quarter GDP rose 0.1% (annualized), which was well short of market expectations. But don’t get excited – this is a backward looking indicator. Q2 is already 2/3 over and it’s looking a lot stronger than the prior quarter and winter months. Employment in particular looks solid, but a raft of other data points to building strength.
A few points to consider:
- GDP will be revised twice, and the final number is likely to be significantly different than 0.1%.
- Trend growth is still improving: trailing 12-month growth is 2.3%, versus 1.3% at the end of Q1 2013.
- Easter was late. A late Easter pulls activity from 1Q into 2Q.
- Hours worked fell in Q1 due to bad weather. If hours worked had not fallen, Q1 growth would have been about 2.5%.
Filed under: ECB, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Macroeconomics, Sam Wardwell, United States | Tagged: China, Europe, Fed Action, Fed tapering, GDP, Japan, Sam Wardwell, Slow growth, tapering, the Fed | Leave a comment »
Posted on April 21, 2014 by Sam Wardwell
The Fed’s “Beige Book” painted a beige—or is it Goldilocks?—picture of the economy, as most districts reported economic activity growing at a modest/moderate pace, employment generally rising, and wage pressures still generally well-contained. Nothing suggested cause for the Fed to change its plans or guidance.
- Indeed, in her speech last week, Fed Chairwoman Janet Yellen said that she thinks the U.S. is at least 2 years away (maybe more) from reaching full employment and that inflation pressures remain subdued, so tightening policy any time soon would probably be premature.
- With that said, her speech wasn’t all that dovish. She didn’t make new promises or push the envelope; rather, she reiterated that Fed policy remains data-dependent and the Fed “must always be prepared to respond” to rising inflation.
- Somewhat worryingly (for those who worry about these things), she stressed the mandate of maximizing employment and acknowledged the responsibility to constrain inflation, but made no mention of preventing asset price bubbles in things like stocks, houses, or things that yield 5%.
Business and Consumer Activity Rebounding
Early in the week, the Empire State (NY Fed) survey disappointed, slipping from 5.6 to 1.3 on weak new orders. Later in the week, the Philadelphia (Mid-Atlantic) Fed index surprised on the upside, rising from 9.0 to 16.6 on strong new orders. The market’s reaction suggests Philadelphia trumps New York.
Filed under: ECB, Equity Market Insights, Europe, Fixed Income Market Insights, GDP, Inflation, Macroeconomics, Sam Wardwell | Tagged: Bonds, Capital Markets, China, ECB, Europe, Fed tapering, GDP, inflation, Sam Wardwell, Slow growth, Ukraine, US GDP | Leave a comment »